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ZACKS: Twitter (TWTR) Stock Sinks As Market Gains: What You Should Know

Zacks Investment Research - Tue Nov 27, 4:45PM CST

Twitter (TWTR) closed the most recent trading day at $32.63, moving -0.58% from the previous trading session. This change lagged the S&P 500's daily gain of 0.33%. At the same time, the Dow added 0.44%, and the tech-heavy Nasdaq gained 0.01%.

Coming into today, shares of the short messaging service had gained 1.33% in the past month. In that same time, the Computer and Technology sector lost 1.56%, while the S&P 500 gained 0.89%.

Investors will be hoping for strength from TWTR as it approaches its next earnings release, which is expected to be February 14, 2019. The company is expected to report EPS of $0.26, up 36.84% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $864.87 million, up 18.22% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.80 per share and revenue of $2.98 billion. These totals would mark changes of +81.82% and +22.12%, respectively, from last year.

Any recent changes to analyst estimates for TWTR should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. TWTR currently has a Zacks Rank of #1 (Strong Buy).

Investors should also note TWTR's current valuation metrics, including its Forward P/E ratio of 41.11. This valuation marks a discount compared to its industry's average Forward P/E of 52.8.

It is also worth noting that TWTR currently has a PEG ratio of 1.86. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. TWTR's industry had an average PEG ratio of 2.96 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 31, putting it in the top 12% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow TWTR in the coming trading sessions, be sure to utilize Zacks.com.


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